# How to calculate simple interest in Excel

Multiply principal by rate by time in years: `=B2*B3*B4`.

**Excel:** `=B2*B3*B4` (Every current version)

**Google Sheets:** the same formula works.

## Example

Sample data (row 1 is the header):

| A | B |
| --- | --- |
| Loan | Value |
| Principal | 8000 |
| Annual interest rate | 0.055 |
| Years | 3 |
| Interest |  |

Formula in B5: `=B2*B3*B4`

Result: $1,320.00

## How it works

Simple interest is charged only on the original principal, so it is the same every year: 5.5% of $8,000 is $440 a year, and three years make $1,320. Compound interest, by contrast, also charges interest on earlier interest.

## Other ways

- `=B2*(1+B3*B4)`: The total to repay: principal plus interest. (Total amount: $9,320.00.)
- `=B2*(1+B3)^B4-B2`: Compound interest on the same terms, for comparison. (Compound interest is higher: $1,393.93.)

## Common mistakes

- Time must be in years when the rate is annual. For 9 months use 0.75, or `9/12`.
- Enter the rate as a percentage (5.5%) or decimal (0.055), not 5.5.

## Questions

**How do I calculate simple interest between two dates?**

Use the days divided by 365: `=B2*B3*(C2-C1)/365`, with the dates in C1 and C2.

**When is simple interest used?**

Short-term loans, some car loans, bonds' accrued interest and many personal loans between people.

Every formula and result on this page was checked by running it in the Spreadsheet Practice formula engine on 2026-10-30.

Source: https://spreadsheetpractice.com/formulas/calculate-simple-interest